Federal Contractors Will Soon Be Required To Provide Paid Sick Leave

The United States Department of Labor (“DOL”) recently announced a proposed rule implementing Executive Order 13706, which requires certain federal contractors to provide up to seven days of paid sick leave annually. The paid sick leave can be used for family care and absences resulting from domestic violence, sexual assault, and stalking, in addition to an employee’s own medical issues. The DOL estimates that the new regulations will provide sick leave to nearly 437,000 workers employed by federal contractors.

Coverage of contracts and employees under the proposed rule is nearly identical to coverage under the regulations on minimum wage for employees of federal contractors, except that this proposal would also cover those employees exempt from the Fair Labor Standards Act’s minimum wage and overtime provisions. Covered contracts include procurement contracts for construction, service contracts, concession contracts, and contracts in connection with federal property or lands and those relating to offering services to federal employees, their dependents, or the general public. Grants, contracts with Indian Tribes, small construction contracts (under $2,000), and contracts for the manufacturing or furnishing of materials, supplies, articles, or equipment to the federal government are specifically excluded.

Under the proposed rules, employees must accrue a minimum of one hour of paid sick leave for every 30 hours worked on, or in connection with, a covered contract. Instead of tracking hours under the accrual method, employers may frontload an employee with 56 hours of paid sick leave at the beginning of each accrual year. Contractors may limit accrual to a maximum of 56 hours each year, but must allow employees to carry over accrued, unused sick leave from one year to the next (again subject to the permissible 56 hour cap). Federal contractors are not required to cash out an employee’s accrued but unused paid sick leave at the time of job separation, but they must reinstate accrued but unused sick leave if the employee is rehired within 12 months. Employees must provide at least seven days’ advance notice when the need for leave is foreseeable and as soon as practicable in all other circumstances.

The Notice of Proposed Rule Making, which can be found here, invites interested parties to submit comments on the proposed rule athttp://www.regulations.gov/ by March 28, 2016. The Executive Order directs the Secretary of Labor to issue regulations implementing the new requirements by September 30, 2016, and the new regulations will apply to contracts awarded on or after January 1, 2017. Federal contractors should keep an eye on these developments and plan to implement the new requirements later this year.

Electronic Alerts are written by Barran Liebman attorneys for their clients and friends. Alerts are not intended as legal advice, but as employment law, labor law, and employee benefits announcements.